As a small business owner, you wear many hats – one being that of Chief Financial Officer (CFO). Being the CFO of your business does not necessarily mean being your accountant – in fact, I highly recommend hiring someone to do your bookkeeping and financial reporting for you (i.e., the collecting and reporting of results). As the CFO of your business, you are instead focused on strategy, planning and operating your business to maximize your profits and cash flow, and your financial value. You have a big picture vision, so you look at your financial plan, forecasts, budgets and results from 30,000 feet, and analyze those results in context of your overall business objectives and strategies, asking “what if…” You determine what your results are telling you, and make strategic, financial and operational decisions accordingly.
So, how do you do build a business model that will allow you to maximize your cash flow?
This is step 5 of my 8 Steps to Building Your Road Map to Success – create your strategic operating and financial plan (if you missed the previous steps, click HERE to go to see previous posts). As a small business owner myself, I like to keep it simple – first by building a profit model that allows you to create fluid and sustainable profits and has these key characteristics:
- is intuitive, flexible and has flow
- allows for creativity and innovation
- is scalable and has multiple layers that allows you to easily and fluidly up-sell, cross-sell and down-sell between the layers of services and packages
- focuses on 2-3 things that you do really well, and
- allows you to continuously dip into your well of opportunity, to connect with the people entered your world at various levels and give them the “what’s next”.
Always with your core business purpose and ideal client in mind, the key is to set up your business model and services/packages in a way that allows you to maximize every opportunity to its full potential. Start with your platinum service level that will bring you top dollar and platinum client, then your entry level service that will allow people to connect with you for little investment, and then fill in the middle with a couple of gold and silver level offers that will engage and create momentum with your clients.
Ultimately, you want to maximize your profits, so when you create your business profits model with the different layers of packages/offers, you’ll need to run the numbers. This is what gets scary for a lot of people, especially creative types in my experience (as a creative myself – I write poetry and design jewellery for the everyday occasion – I can empathize. But I also have a very analytical mind that allows me to help bridge the gap for other creatives in building their business models for success.). But without knowing your numbers – the cost of inputs (including what your time is worth and overheads), capital requirements, desired profit margins, projected unit sales and break-even points – you may find yourself struggling to make ends meet.
When clients come to me for assistance with their pricing and what to charge, I have found that every one of them has undervalued what their time is worth and how much time the spend developing, marketing and delivering their products and services, leading them to charge to low a price. This results in lower profits and having to work even harder for the revenues they do collect, leaving them cash and time poor. With my easy pricing model, I then show them how to quickly determine what their time is worth and how to price each of their packages and services to create maximum value.
This is just one of the things that I will be showing participants at my upcoming workshop on February 29th in Milton. If you want to know how to easily charge what you’re worth and price your packages and services for maximum value, then you MUST come to the workshop! Click HERE to secure your spot and get all the details.
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[author] [author_image timthumb=’on’]http://22.214.171.124/wp-content/uploads/2015/10/linda-contact-e1447279259479.jpg[/author_image] [author_info]Linda Spencer is a Creator, Visionary, Business Coach and Savvy Canadian Tax Specialist. Linda believes that NO ONE should have to struggle to create the life of their dreams. This drives her to empower business owners with the knowledge and tools they need to gain insight and clarity into their business strategy and to take inspired action to streamline their processes, improve their cash flows and reduce their stress levels, such that they can more easily create the life of their dreams. With 20 years experience helping businesses with their financial, tax and business plans, managing tax risk and advising on Canadian corporate, personal income tax and sales tax matters, Linda combines her expertise and knowledge with her intuition and creative abilities to arrive at sound tax and business solutions. She is also known for successfully leveraging cross-functional teams and creating efficient processes that translate into tangible business results. Discover how you can create more ease and flow in your business at www.VisionSpire.ca (formerly www.LindaSpencerTaxConsulting.com)[/author_info] [/author]